Weak Stock Market Ignites Selling in Aussie

There has been no follow-through to the upside Sunday night followingthe strong close in the AUD USD on Friday.  Last week traders weredriving up the Australian Dollar as trader appetite for risk increasedwhile the U.S. stock market was rallying. 

There has been no follow-through to the upside Sunday night following the strong close in the AUD USD on Friday.  Last week traders were driving up the Australian Dollar as trader appetite for risk increased while the U.S. stock market was rallying.  

This evening, downside pressure is on the Aussie as speculation of U.S.  banking problems are driving traders to the safety and security of the lower yielding U.S. Dollar.

The current chart pattern suggests the formation of a secondary higher top which is usually a strong sign that a final top has been reached.  In this case the final top could be .7326. The secondary top is forming at .7239.  This top will be confirmed following a break through .7106.

Downside pressure is likely to continue until the bears to push this market through the last swing bottom at .6786 and officially turn the daily trend to down.

At this time shorting the market is counter-trend but the developing fundamentals are suggesting that this is the right thing to do especially if the rumors about U.S. banking problems prove to be true when the final bank stress test reports are released on May 4.